Legal Literacy - This article discusses the implementation of Smart contracts in society with the freedom of contract that occurs between the parties.

Contracts have a function to protect the interests of the parties against interests or assets so as to minimize disputes. This condition is also supported by advances in science, telecommunications and information technology and modern modes of transportation that provide freedom of movement for transactions of goods and / or services to cross the borders of a country.

The development of contracts continues to transform from being conventional to digital as economic activity has been electronically based. However, it becomes a legal debate with the existence of electronic-based agreements calledSmart Contractor called a digital-based smart contract.Smart Contractis a further development of the application ofblockchainaftercryptocurrencynamely an agreement or agreement between parties that is able to execute the clauses of the agreement automatically.

In principle, in carrying out an agreement, the parties must implement the principles that apply in the agreement including; the principle of Freedom of Contract (Freedom of Contract); Principle of Consensualism (Concensualism); Principle of Pacta Sunt Servanda; and the Principle of good faith (good faith'). Several principles above aim to provide a balance between the parties who make, implement, until the completion of the agreement so as to be able to predict (predict'), provide (provide) and protect it (protect).

Smart Contract Implementation

In this casesmart contractcan be carried out without a third party, then the transactions carried out can be tracked and cannot be changed. Generally, the parties in making a conventional contract in making changes (addendum) if there are changes to the clauses or contents of the agreement that are deemed necessary to be changed. The character of this agreement is to legally bind the parties to carry out both rights and obligations with Predetermined limitations.

The hallmark ofsmart contractthis has a risk where the recipient only receives and the dominant giver determines the contents or clauses in the agreement that. In this case, there is an indication that there is no implementation of the principle of freedom of contract between the parties in making an agreement so that potential losses will be received by the recipient if the dispute occurs. Freedom of contract, which is the "spirit" and "breath" of a contract or agreement, implicitly provides guidance that in contracting, the parties are assumed to have a balanced position.

Referring to the subjective conditions regarding the validity of the agreement, there must be mutual “agreement” with each other. According to Article 1338 Civil Code (KUHPerdata) that “all agreements legally made apply as law to those who make them”. Therefore, legally an agreement will be aligned with the force of law that will protect the parties. If it is connected with this Smart Contract, in practice it can execute the provisions in the contract automatically without the need for manual human intervention.

First, in carrying out an agreement, human intervention or legal subject must be carried out in order to provide space or opportunity for what things must be done and avoided. Because, the majority of contract disputes occur due to a lack of understanding from one of the parties or the dominant high position of one of the parties so that there is no prior negotiation. In principle, an agreement is formed because of the suitability or conformity of the will of the parties, between the offer (offer) and the recipient (acceptance).

Basically, an agreement is not only made verbally or in writing but can be done through a sign or code. Insmart contract itself, to carry out execution if all the requirements have been met in the agreement. Even though all these requirements have been met, but the contents of the agreement have not been negotiated by the parties, that is where the doubt about the application of the principle of freedom of contract occurs.

Second, the difference with electronic contracts where there is still individual intervention in the process. In general, an electronic contract is defined as a contract made in electronic form. Electronic transaction activities result in an engagement or legal relationship electronically by combining a computer-based network with a communication system which is then facilitated by the internet or global network. The author argues that in the implementation ofsmart contract it will be safer if there is still manual intervention by humans to avoid losses in the future.

Third, The general purpose ofsmart contract is explained by Nick Szabo in a manuscript entitledsmart contract namely to carry out credible transactions without third-party intermediaries. The level of risk if there is no one to guide the process of forming an agreement will experience a problem with the content or clauses if it does not comply with the parties. The characteristics of the principle of freedom of contract according to Agus Yudha Hernoko are that they must determine or choose the clauses of the agreement to be made; determine the object of the agreement; determine the form of the agreement; and accept or deviate from the provisions of optional laws (aanvullend, optional). In this way, the determination of a clause or object of the agreement will provide legal certainty of what has been previously agreed.

Therefore,smart contractdoes not implement the principle of freedom of contract if there is no manual intervention by humans. The true essence of an agreement is a tool that leads to the success of mutually binding interests to achieve the appropriate goals from the beginning of the agreement. At least, with the parties interveningsmart contractwill allow changes or additions to the contents of the agreement clause